From Sales to Manufacturing
Charney switched sides when he learned Hanes and
Fruit of the Loom had moved their factories offshore.
Convinced it was still possible to produce garments in
the U.S., he dropped out of college in the early ‘90s and
moved to South Carolina, then one of the nation’s textile
manufacturing hubs, to learn the T-shirt business.
In 1997, he relocated to Los Angeles, where he
paired up with a team of Korean garment workers > >
The retail graveyard is littered with iconic names — Gimbels, Woolworths, Marshall Fields. But if you were going to make a Netflix mini-series
about the drama of the modern retail business, the
meteoric rise and subsequent fall of American Apparel
has all the key ingredients: sex, clothes, money and a
bad-boy anti-hero at the helm. The company even has
an unexpected rescuer providing DIP financing as it
takes its second, and perhaps final, trip into Chapter
11 — new kid on the block Encina Business Finance.
Whether American Apparel will join the ghosts of
retail stores past is still up in the air, leaving room for
more exciting episodes.
Our story begins in an unlikely space: Founder Dov
Charney’s college dorm room. Even before starting
college, the Montreal native was infatuated with Hanes
cotton T-shirts, socks and underwear. He would drive
across the border to purchase them and bring them
back to sell to his Canadian friends. He expanded his
cross-border sales while studying at Tufts University
outside of Boston and officially launched American
Apparel in 1988.
The American Apparel Show:
A Rollercoaster Ride Through Bankruptcy
and Back Again
BY NADINE BONNER
American Apparel isn’t the only youth-oriented retailer that sought Chapter 11 protection in 2016, but its
story is the most dramatic. Its first bankruptcy proceedings included a failed battle by ousted Founder and
CEO Dov Charney to regain control. Six months after exiting Chapter 11, the company was back in
bankruptcy with $30 million DIP financing from Encina Business Capital and a $66 million stalking horse
bid from Canadian underwear manufacturer, Gildan. Is this American Apparel’s last stand?
From the outset, Dov Charney cultivated a sexy image, offering
body-hugging but comfortable garments. He created erotic ads
featuring real women, including employees, instead of professional
models. Critics said the ads were almost pornographic, but they
seemed to resonate with the consumers the company targeted.
Editor, ABF Journal